Should I Start an LLC for My Walking Tour Business?

Starting a limited liability company (LLC) for your walking tour business can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a walking tour business, lawsuits can arise from things like customers getting injured on your tours or the release of a client’s financial information following a data breach.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your walking tour business seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Walking Tour Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Walking Tour Business

By starting an LLC for your walking tour business, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Walking tour businesses will benefit from liability protection because of the risk of personal injury, property damage, theft, and other general business risks.

Example 1: You are contracted to take a group of exchange students on a walking tour. At one stop, a student suddenly goes missing and is found six hours later with physical injuries. If he decides to file a lawsuit, the claim will only affect your LLC’s assets as a result of your limited liability protection.

Example 2: Your customers’ financial information is stolen from your company’s website during a hacking incident. Many of them have money debited out of their account and end up suing your business as a result. Here, limited liability will prevent you from being held personally liable for any damages that may arise.

Example 3: During a tour of a major historical landmark, one of your customers is injured and has to be rushed to the nearest hospital for emergency treatment. If he goes on to sue your business in order to seek medical damages, the lawsuit will affect your LLC’s assets only, not your own.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Walking Tour Business

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a walking tour business owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Walking tour businesses rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because limited liability protection from being an LLC protects your personal assets, not your business assets.

Walking tour businesses need business insurance to safeguard themselves from lawsuits and other financial implications that may arise as a result of personal injuries, loss or damage of property, and data breaches.

Common Situations Business Insurance May Cover for a Walking Tour Business

Example 1: During a tour, a pickpocket takes the wallet of one of the guests. They blame you for taking them to an unsafe area of town and failing to give a proper warning. They decide to sue for both monetary loss and emotional damages. General liability insurance would cover the costs to either fight or settle their claim.

Example 2: When you’re giving your presentation, you use your arms to illustrate your words. During one of your tours, you knock a person’s expensive sunglasses off their face and accidentally injure their eye. General liability insurance would cover the costs associated with replacing the sunglasses and treating their injuries.

Example 3: The name of your walking tour business is similar to that of another tourist-related company in the same area. The other company believes you are intentionally stealing business and decides to file a lawsuit for lost income. General liability insurance would protect your walking tour company by covering costs associated with fighting or settling the claim.

Other Types of Coverage Walking Tour Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all walking tour businesses should obtain:

Commercial Property Insurance

Some walking tour businesses will have a small office or structure where guests can check in before they get started on the tour. If you own this space, you’ll need commercial property insurance to protect it in case of damage due to inclement weather, fire, or criminal activity.

Workers’ Compensation Insurance

Workers’ compensation insurance should be made available for all staff, whether they work once a week or every day of the month. Cities and towns can be dangerous places, and there are far more ways to be injured outdoors than in an air-conditioned office. This insurance will cover expenses associated with both acute and chronic injuries sustained on the job.

Data Breach Insurance

If your customers book primarily online, data breach insurance is available to cover the costs associated with a hack. If a cybercriminal steals your customers’ financial and biographic information, data breach insurance can help protect your livelihood and safeguard your reputation.

Commercial Umbrella Liability Insurance

Commercial liability insurance is available only if a general liability policy reaches its maximum payout for a claim against your company. For example, if a customer alleges that they sustained injuries due to your business, it may take several months to successfully fight the claim. General liability insurance may only cover a month of legal fees, but a commercial umbrella policy gives the owner the means to continue without having to dip into their own personal funds.

Home-Based Insurance

If you operate your walking tour business from home, home-based insurance will keep your equipment and structure safe. A typical home insurance policy will not cover commercial supplies or tools.

Commercial Auto Insurance

This insurance is available if you transport guests to and from a specific base. Because you’re using the vehicle for commercial purposes, your personal auto insurance policy may deny certain claims associated with injuries or property damage. Commercial auto insurance will cover damage to your vehicle, its passengers, and contents in the event of an accident. It will also cover damage or injury to others involved in the accident if you or your employees are found liable.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance.

Read our Walking Tour Business Insurance article for more info.

You can start a walking tour business with a budget of around $2,000–$3,000. Your major costs would involve marketing materials such as a website, brochures, posters, and business cards.

You'll also need to purchase suitable clothing and footwear for a variety of different weather conditions.

Visit our How to Start a Walking Tour Business guide to learn more about the costs of starting and maintaining this business.

The ongoing expenses of running a walking tour business include marketing and insurance.

Learn more about running a walking tour business.

Walking tour businesses make money from tour fees and gratuities from tourists. Some make a commission when their customers patronize businesses on their tour route.

Learn more about starting a walking tour business.

Walking tours offer tourists a close view of the sights and sounds of their destination. Walking tour businesses should aim for a gross profit margin of about 65%. Profits will depend on the location and content of the tour.

Learn more about starting a walking tour business.